How is Georgia’s economy faring these days?
There is good news, to an extent. Though the state’s unemployment rate ticked up in July, unemployment remained near historical lows (3.4%) — and lower than the national rate of 4.3 percent. According to one Georgia chief executive, “There is no material stress building up in the labor market.”
Credit: Handout
Credit: Handout
But there is bad news bubbling beneath the surface. Consider labor force participation, which continues to lag at 62 percent. This is a full percentage point below where it was before the pandemic and seven percentage points below where it was before the Great Recession in 2008. In Georgia and across America, employers are struggling to fill open jobs, and incumbents and contenders claim to have all the solutions to fix stubborn economic problems.
Removing unnecessary state regulations won’t fix all of Georgia’s ills, but it will certainly help. Gov. Brian Kemp and policymakers in Atlanta have taken steps to address the regulatory thicket in the state. From increasing port activity in Savannah to strengthening ties with countries like South Korea and boosting electric vehicle production, there is a concerted effort for Georgia to emerge as a post-pandemic economic leader.
Momentum has carried over from last year. Case in point: After the passage of Senate Resolution 85, the Senate Occupational Licensing Study Committee was convened and met several times over the course of 2023.
But, if policymakers are truly serious about promoting an environment for economic prosperity, bold action — as opposed to further study or half-measures — is necessary.
Last year, Georgia enacted HB 155. The bill seeks to address an important and completely unnecessary friction created by occupational licensing boards in the state. If I drive in Georgia, my license is recognized. The competency of the state that issued my license is respected and I can transfer my license with little bureaucratic delay.
Occupational licenses do not work this way. If I’m a licensed family therapist and I move to Georgia, my license will not automatically be recognized. As a result, the skill set that I have might be wasted. I might take another job but not take full advantage of my skill set (underemployment), or I might not work at all.
To some extent, HB 155 addressed this friction. But it excluded all health care workers from taking advantage of the reform. Further, it explicitly doesn’t trust other states to train competent workers. Instead, licensing requirements must be “substantially similar” to Georgia’s requirements. This focus on inputs is outdated and silly. What really matters is the reputation and track record of the professional. If the professional has a license in good standing, why not trust the judgment of other states?
A better step in the right direction, but focused solely on one profession, is SB 373, which was recently signed by Kemp. SB 373 allows licensed family therapists from other states to easily work in Georgia. There is no requirement that licensing requirements be “substantially similar,” and it will help ease frictions for critical mental health workers from being able to move to Georgia and utilize their vital range of skills.
Looking to the future, further reform in the spirit of SB 373 would go a long way toward alleviating shortfalls in the Peach State’s labor force participation. In recent research that I co-authored with Kihwan Bae, we assess and analyze recent reforms that go much further than Georgia in eliminating unnecessary frictions in the labor market. Our research finds that universal recognition of occupational licenses from other states increases employment by a full percentage point. This boost in employment is largely driven by increases in labor force participation and reductions in unemployment. Further, we found evidence of increases in in-migration into states that pass the reform of more than 48 percent.
Georgia would not be alone if it moved forward with bold reform. Nebraska became the latest state to pass this important reform earlier in the year. Mississippi has had the reform in place for three years now.
Georgia can also consider further boldness in its policy reforms. The governor’s signature on SB 354 is a viable first step, as the legislation will exempt several beauty services such as makeup application, hair washing and blow-dry styling from licensing. But there are a laundry list of other examples where reform is needed and licensing is overly burdensome to aspiring workers.
Like many other states, Georgia is struggling to get people into the workforce. Only bold reform will set the state up for future prosperity.
Edward Timmons is a service associate professor of economics and director of the Knee Regulatory Research Center at West Virginia University. He is also a senior research fellow with the Archbridge Institute.
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